Are you thinking of buying your first home next year? Here are a few things to remember as a first-time homebuyer.
The Beginning of The Year is a Great Time to Buy a House
The first thing we want to point out is that – believe it or not – the beginning of the year is a great time to buy a house. No, it’s not the busiest time of year in the real estate industry… but that’s why it’s a great time to buy a house. Usually, the spring and summer are a seller’s market. Many buyers are trying to buy a home during these times of the year, so the seller has power. They’ll likely get multiple offers if they have a great home in a good area that is priced right. They can get buyers to negotiate and generally get a better deal on the house sale. The winter is different. If someone is selling their house at the beginning of the year, they probably have a really good reason. Maybe they had to move for work and are trying to get rid of the house because they had already moved. Perhaps the couple is getting a divorce – January is a big month for that – and now they’re trying to get rid of the house as part of the divorce. The point is that as a first-time homebuyer, you may want to buy a home in the winter if you’re already pre-approved and it works for your schedule! That leads us next to our next topic.
Get Pre-Approved Before You Start Looking
If you haven’t been pre-approved for a mortgage, we encourage you to apply for a pre-approval ASAP. In today’s market, a seller will only seriously consider your offer if you either 1) make a cash offer or 2) come to the table with a pre-approval letter. Even in a buyer’s market, sellers don’t want to waste their time with a buyer who may not follow through with the purchase. They want to work with a buyer who has already been pre-approved for the mortgage amount they need to buy the home. If you have already been pre-approved, but it was a few months ago, check back with your lender or mortgage broker. Your rates have probably changed, so you’ll need an updated letter.
Pay Close Attention to the Numbers
When most people buy their first home, they don’t realize all the costs of purchasing the home. Besides the initial closing costs, there are things like a home inspection, homeowners insurance, and property taxes. These costs aren’t insignificant, so you must ensure your budget allows for these. Try to avoid stretching yourself too far, too. Even though your mortgage will stay the same throughout a fixed mortgage loan, your property taxes will likely increase over time. Knowing the numbers goes beyond just your budget, though. There are some essential factors that play into your ability to get a great mortgage, such as your credit score and debt-to-income (DTI) ratio. How are those doing?
If You’re Unhappy with Your Mortgage Rates, Improve Your Numbers
If you’ve checked into your credit score and DTI, and they aren’t great, your mortgage rates will reflect that. A lender will hesitate to give you the lowest rates because they’ll be concerned you may miss payments. The good news is that you can improve your credit score and DTI ratio. It takes time, but it will be worth it in the long run because you’ll save a lot on your mortgage.
We’ve talked about a lot here, but it’s essential that you cover the fundamentals as a first-time homebuyer. So if you have any questions about the mortgage process or buying a home, get in touch! Email us at info(at)rcghomeloans(dotted)com or call 702.850.2000, and we’ll help you in any way we can.